Citing upcoming catalysts, UBS puts Apple (AAPL +1.6%) on its Most Preferred list, helping shares outperform in early trading. The firm was among the first to raise alarm bells about iPhone order cuts. Apple is now up 11% from its March 4 low. [View news story]
Humble on NQSO's, the difference between current price and strike price is "income" (and the required withholding is likely to be ~50% in CA even if their marginal is less).
So, when a price dips, it appears as less "income" and the tax bill is lower, and the cost basis becomes that price.
When the price recovers, and held for more than a year, then it's a long term gain on the difference between the cost basis set at exercise and the sale price after price recovery.
The point is, NQSO exercise by insiders is actually a bullish move by them since they expect a price recovery to more than make up for the income tax they pay at exercise.
The Wisdom Of Not Reinvesting Dividends [View article]
Chowder,
It is interesting you brought up SDRL.
My strategy is to harvest those dividends for deployment into my core. Yes, it diminishes the "growth" of my income stream (because of the compounding), but not necessarily the amount of my income stream.
IMO, the core is the "reliable" aspect I'm trying to build.
"A lot of people prefer the selective dividend reinvestment approach. This is where you collect your dividends in cash and then you selectively purchase undervalued companies."
I don't believe that the all those that selectively reinvest dividends *only* do so into undervalued companies.
In my case I have 4 "classes", which at the moment consists of, Core (35%), Non-Core (40%) Some Funds (20%), and Cash (5%).
In my case, at the moment, I selectively reinvest all income into core. When choosing which of the core position(s) are added to I factor in relative value and relative weight among other core holdings. Generally all of the core holdings get some form of reinvestment 1-2 times a year. Today was new core position (INTC) at a 25% weight to the other 11.
It is true that this does tend to reduce the overall portfolio yield since in many cases the non-core holdings have higher yields (e.g. BDC, MLP, etc). This also tho tends to reduce the overall beta and I feel adds to a more reliable income stream for the future.
A Roth IRA is yielding say $600 quarterly (e.g. $20k at 3%). It is also being funded by $1250 quarterly via contribution.
This results in either:
Scenario 1 == "Drip": One has a cash balance of $1250/q with the other $600 DRIPped. A $10 commission done once a quarter with the contributed funds has an expense of 0.8%.
Scenario 2 == "Collect and Deploy": One has a cash balance of $1850/q. A $10 commission done once a quarter with the contributed funds has an expense of 0.54%.
I have a problem seeing the "compounding" benefit of scenario 1 over that 3 month period.
I also feel that one can possibly utilize scenario 2 to have the $600 buy low versus buying high.
Income Investors: Make More Cents Out Of Your Buck [View article]
"Given the absence of risk-free return in the current market" Has there EVER been such a thing as risk-free? Granted some investments have differing risks, and they may even negatively correlate historically (until they don't).
The take-away I got was that one should understand the differing risks of various holdings (not necessarily "asset classes" in MPT parlance), take a peek into *your* crystal ball about the future for each holding and diversify accordingly (since crystal balls are usually very cloudy).
Citing upcoming catalysts, UBS puts Apple (AAPL +1.6%) on its Most Preferred list, helping shares outperform in early trading. The firm was among the first to raise alarm bells about iPhone order cuts. Apple is now up 11% from its March 4 low. [View news story]
So, when a price dips, it appears as less "income" and the tax bill is lower, and the cost basis becomes that price.
When the price recovers, and held for more than a year, then it's a long term gain on the difference between the cost basis set at exercise and the sale price after price recovery.
The point is, NQSO exercise by insiders is actually a bullish move by them since they expect a price recovery to more than make up for the income tax they pay at exercise.
Your Bond Allocation For 2013: It's Time To Lower Your Risk [View article]
Am I incorrect in your comment that the "call date" is likely to be an advantage to someone other than myself?
If so, they call, they win, they don't I lose?
Dips And Pullbacks: Opportunities Or Sucker Punches? [View article]
There is an advantage to a "reliable flow" ... of dividends that is ...
<my last of the toilet/feminine humor>
The Wisdom Of Not Reinvesting Dividends [View article]
It is interesting you brought up SDRL.
My strategy is to harvest those dividends for deployment into my core. Yes, it diminishes the "growth" of my income stream (because of the compounding), but not necessarily the amount of my income stream.
IMO, the core is the "reliable" aspect I'm trying to build.
Dips And Pullbacks: Opportunities Or Sucker Punches? [View article]
I have one I call my "toilet paper and tampon" company (KMB).
Your Bond Allocation For 2013: It's Time To Lower Your Risk [View article]
What do you see as limiting supply if/when demand increases?
Dividend Reinvestment - Yes Or No? [View instapost]
I don't believe that the all those that selectively reinvest dividends *only* do so into undervalued companies.
In my case I have 4 "classes", which at the moment consists of, Core (35%), Non-Core (40%) Some Funds (20%), and Cash (5%).
In my case, at the moment, I selectively reinvest all income into core. When choosing which of the core position(s) are added to I factor in relative value and relative weight among other core holdings. Generally all of the core holdings get some form of reinvestment 1-2 times a year. Today was new core position (INTC) at a 25% weight to the other 11.
It is true that this does tend to reduce the overall portfolio yield since in many cases the non-core holdings have higher yields (e.g. BDC, MLP, etc).
This also tho tends to reduce the overall beta and I feel adds to a more reliable income stream for the future.
Dividends Vs. Buybacks: Which One Wins? [View article]
Obvious answer is to sell to obtain income (e.g. pay a utility bill)
Dividends Vs. Buybacks: Which One Wins? [View article]
If the earnings are spent on div or buyback almost doesn't matter to the price.
I'd like the div.
Market Strategies - Buy Low, Sell High [View instapost]
Income Investors: Make More Cents Out Of Your Buck [View article]
I disagree because I see "inflation" as a risk.
Capital preservation, IMO, isn't only about the the monetary value being preserved but more importantly the purchasing power of it.
Maximizing Dividend Reinvestment [View article]
A Roth IRA is yielding say $600 quarterly (e.g. $20k at 3%).
It is also being funded by $1250 quarterly via contribution.
This results in either:
Scenario 1 == "Drip":
One has a cash balance of $1250/q with the other $600 DRIPped.
A $10 commission done once a quarter with the contributed funds has an expense of 0.8%.
Scenario 2 == "Collect and Deploy":
One has a cash balance of $1850/q.
A $10 commission done once a quarter with the contributed funds has an expense of 0.54%.
I have a problem seeing the "compounding" benefit of scenario 1 over that 3 month period.
I also feel that one can possibly utilize scenario 2 to have the $600 buy low versus buying high.
Comments?
Income Investors: Make More Cents Out Of Your Buck [View article]
Has there EVER been such a thing as risk-free?
Granted some investments have differing risks, and they may even negatively correlate historically (until they don't).
The take-away I got was that one should understand the differing risks of various holdings (not necessarily "asset classes" in MPT parlance), take a peek into *your* crystal ball about the future for each holding and diversify accordingly (since crystal balls are usually very cloudy).
Herbalife Is An Endless Chain [View article]
Sorry if I miss the difference.
(Not in HLF stock or consumer/distributor).
Is The 4% Rule Becoming The 3% Rule? [View article]